Dateline: January 3, 2002

Texas customers can select electric provider 

COLLEGE STATION – The new year is the traditional time for change, and here’s one consumers can look forward to.

Beginning Jan. 1, 2002, Texas Electric Choice will give many residential and commercial consumers the option of choosing their own retail electric provider (REP), said Dr. Lynn White, Texas Cooperative Extension family economics specialist.

However, she added, not all consumers will be eligible for this new service – only those now served by investor-owned utilities and city utilities and electric cooperatives that have opted to offer this choice.

Still, for eligible consumers, this new program could be of financial benefit. “The goal of Texas Electric Choice is to eventually lower the price of electricity use,” White said. But what exactly does Electric Choice mean? “Consider the current electric company’s lines as the delivery system for electric power,” White said. “The company will continue to maintain these lines and provide electricity to consumers, but in addition ... it will also rent the lines to other power companies competing for business.” The Public Utility Commission of Texas (PUC) will continue to regulate the delivery of electricity to ensure its safety and reliability and will have limited regulation over REPs.

In order to make the most informed choice about choosing an REP, White advised visiting the PUC Web site, http://powertochoose.com/ There, consumers will find links to useful sites, including an Electricity Facts Label for comparing information for each REP’s prices, contract terms, generation sources and emissions.

“Every participating REP must provide this information,” she said. “If a monthly service or customer care fee is added, it must be included in the average per-kilowatt-hour rate listed, as are all promotions, discounts, or incentives offered by the REP. For example, a REP offering customers one month of free electricity must include this incentive in its price per kilowatt-hour to reflect the free month.”

To start, she said, “Go to the PUC Web site and locate your current provider’s data sheet for its ‘price to beat’ – the rate it will be charging starting Jan. 1.” Rates for all affiliated REPs – except Entergy – “will be 6 percent below current rates for small business and residential customers,” White said. “For competing REPs using existing lines, rates most likely will be even lower.

“Due to a recent lowering of rates in the Entergy service area, those customers will not get the 6 percent decrease.”

During a contract period, the contracted rate can be adjusted for gas price changes, but not more than twice a year, she said. “Compare current price with other features, such as emission levels or contract terms.”

To determine possible savings, consumers should look at their last year’s bills. How much was average use? How much was used during peak months? The PUC Web site www.puc.state.tx.us/ocp/electric/rates/ has information to use when comparing individual average usage with the average residential and/or commercial rates throughout the state.

Some contracts will include fixed prices for service, which means consumers will pay the same price each month. “Fixed prices can be to the consumer’s benefit if market costs go up; however, if market costs lower, the set fee will continue,” White said. “If the electric company chooses to exercise its right to adjust consumers’ rates twice a year to adjust for fuel costs, individual rates may go up and/or down, depending on the fuel market the company’s generation plants use.”

Some consumers may be interested in joining a “club” to increase their buying power, White said. “For the first time, consumers will be able to join these clubs to buy power in ‘bulk,’ getting lower prices or other benefits for members of the group. Electricity-buying groups can be newly-formed groups or existing groups, such as a school district or church. As these clubs form, they will be listed on the PUC Web site.”

All of these clubs must be registered with the PUC, White said. “If clubs want money up front, they must meet certain financial standards to ensure customer funds are protected.”

Most of these clubs form with the idea of saving money, she added. Consumers more interested in other aspects of energy use, such as emissions, should look for clubs with that focus.

And, White advised, consumers need to check out these clubs before joining too. “An aggregator reduces costs to the REP by spreading the cost of soliciting proposals and negotiating and administering the contract for multiple consumers. Check out the club’s experience in energy contract negotiating and management.

“Aggregators must be independent of the REP, with consumers as their main clients. They may charge members a fee; if so, the fee must be disclosed up front.”

In this economy, consumers have choices, White said. “The challenge is to make an informed decision based on individual needs.  Making competition work can result in electric rates being lower than under a state regulated system and should speed the development of new products and services.”

White had other answers for consumers’ questions:

• I don’t want to be hassled by sales calls. Your current electric utility will not give your telephone number to other companies, but it is required to include your name, address and usage information on a list of eligible customers that will be made available to REPs. The company can tell you how to prevent your information from being shared, but while this may reduce solicitations, it will not completely prevent them. Nor will it prevent you from shopping for a REP. Before the opening of the retail electric market on Jan. 1, electric customers will have the opportunity to join a “do not call” list. Check the PUC web site for this announcement. A $3 fee will be charged each customer who places his or her name on the list.

• What happens if my REP stops its service in Texas? The REP will send you a letter advising you of your options, which will include selecting a new REP at any time or returning to your current electric utility without any action on your part. You will not experience any service interruption. Contact your REP for more details.

• What if I want to stay with my current electric utility? On Jan. 1, if you decide not to choose a new REP, you will be transferred to a REP that is affiliated with your current utility.

• If I try a new REP and want go back to my current electric utility, can I? You may be required to sign a service contract with an REP that allows it to charge a penalty fee if you leave before the end of the contract. Read your terms of service document carefully.

• Can I leave my current electric utility completely? You cannot totally remove yourself from all association with your local electric utility. Your current electric utility will continue to be the delivery service for power to your home or business.

The bottom line: If your electricity is provided by a deregulated REP, you can choose from participating companies for the rate, environmental impact and contract terms that best fit your purposes.

For more information about Texas Electric Choice, contact PUC toll-free at (866)797-4839.